$130 Million Verdicts Don’t Raise Medical Costs

By Steve Cohen -
Aug 25, 2013

A jury in one of New York’s most
conservative counties recently returned a $130 million verdict
in a medical-malpractice case, the second-largest in the state’s
history. Lawyers for the losing hospital decried a “jury out of
control” and called for more tort reform. Before the case went
to trial, their offer of an $8 million settlement was turned
down.

What the defense lawyers seemed not to realize is that tort
reform hasn’t worked for 25 years. And large verdicts may be the
most effective drivers in making health care safer.

The case, Reilly v. St. Charles Hospital, centered on the
birth of Shannon Reilly in 2002. The jury determined that the
Long Island hospital and the obstetric nurse had failed to
properly monitor the pregnant mother and her fetus, missed
important signs that the baby was in distress, and then failed
to take corrective action. When interviewed, jury members said
that they agreed with plaintiff’s attorney Thomas Moore that the
child -- who was born with severe brain injury and has a form of
cerebral palsy -- is a “prisoner in her own body” and that the
medical errors were avoidable.

New York doesn’t have a cap on pain-and-suffering awards,
as 29 other states do. The state does limit fees for winning
lawyers at 10 percent of awards more than $1.25 million. Half of
all states also have shorter statutes of limitations for medical
malpractice than for property damage.

Tort reformers’ goals in working for such laws may have
been laudable. Who could be against keeping frivolous cases out
of court, controlling health-care costs and reducing doctors’
malpractice-insurance premiums? In reality, though, their
legislative successes have made things worse.

Unintended Consequences

For example, shortening the statute of limitations -- the
amount of time injured parties have to bring a case -- has
resulted in more doctors being sued, not fewer. In New York,
injured parties have just 2 1/2 years from the time of the
medical procedure to bring an action.

To stop the clock and preserve their rights, plaintiffs
file suits that name every doctor who could conceivably be
liable in the case. After investigation, many of the defendants
are often dropped. But in the meantime, the named doctors suffer
the indignity and anxiety of being sued.

Tort reformers blame the prospect of malpractice suits for
the proliferation of “defensive medicine” and thus higher
health-care costs in general. Doctors, they argue, prescribe
costly tests that patients don’t need in order to protect
themselves against suits. However, extensive research --
including some done by the Robert Wood Johnson Foundation, the
Congressional Budget Office and the Government Accountability
Office -- has shown that tort reform has had no influence on
health-care costs. Doctors practice defensive medicine simply
because it generates extra income.

The effect that lawsuits have had on doctors’ malpractice
insurance rates has also been negligible. Insurance premiums
have still increased in states with extensive tort-reform
measures, researchers at the Robert Wood Johnson Foundation
concluded after reviewing 11 major studies. Rates in those
states rates have gone up 6 percent -- compared with 13 percent
in non-tort-reform states.

One medical specialty, however, has experienced huge
reductions in malpractice-insurance premiums: anesthesiology.
These savings have nothing to do with tort reform. Instead, they
have resulted from anesthesiologists getting fed up with being
sued and losing huge cases.

Anesthesiologists’ Solution

In the 1970s and ’80s, anesthesiologists were paying some
of the highest malpractice premiums in medicine. Problems were
frequent, serious and directly attributable to anesthesia. It
was estimated that 1 in 6,000 administrations of anesthesia
resulted in death. Serious brain injuries were even more
frequent.

In 1982, after a spate of bad publicity triggered by large
malpractice verdicts -- several won by Moore -- the American
Society of Anesthesiologists conducted a comprehensive
assessment of what had been injuring patients. They then
revamped their procedures, established mandatory monitoring,
improved training, limited the number of hours anesthesiologists
could work without rest, redesigned machines and outfitted
others with safety devices.

Within 10 years, the mortality rate from anesthesia dropped
to 1 in 200,000 administrations. And anesthesiologists’
malpractice insurance rates fell to among the lowest of any
specialty.

Unfortunately, other medical specialties -- in particular,
obstetrics and gynecology -- have resisted taking similar steps.
Some individual hospitals, however, have instituted sweeping
reforms to make obstetrics safer. After a seven-year effort at
NewYork-Presbyterian Hospital, so-called sentinel events --
unforeseen problems that cause death or serious injury to
patients -- dropped to zero in 2008 and 2009 from 1.04 per 1,000
deliveries in 2000. And malpractice awards fell to $250,000
annually from $50 million.

Patient safety is a very serious concern in the U.S. Every
year, hospitals see 100,000 to 1 million avoidable deaths -- and
a far greater number of serious injuries. How many more $130
million verdicts will it take before all specialties take
action?

(Steve Cohen was a publisher and author for 30 years. He
recently graduated from New York Law School and passed the bar.
He hopes to be a plaintiff’s advocate.)

To contact the writer of this article:
Steve Cohen at stevecbald@gmail.com.